Deckers' financial report shows that aggressive discounts from competitors are impacting high-end brands.

Sanskriti Shekhar

Reuters, October 22 - Deckers Outdoor DECK.N, the maker of UGG boots and Hoka sneakers, said that aggressive discounting by rivals impacted its second-quarter sales, highlighting the challenges faced by high-end footwear brands as consumers become increasingly selective.

After the earnings release, the company's shares fell 8% in after-hours trading. Details are as follows:

• The shoemaker reported sales of $1.48 billion, below (link) analysts' expectations of $1.51 billion, but profits increased by 27% in the quarter ended September 30.

• “In the U.S. market, we saw an increase in promotional activity throughout the quarter, especially in the sneaker sector. Our commitment to full-price sales weighed on our U.S. e-commerce performance,” CEO Stefano Caroti said during the company's earnings call.

• Comparable direct-to-consumer sales fell by 6.4% in the second quarter

• “The market right now is more concerned with revenue rather than margins,” said CFA analyst Simeon A. Siegel.

• “Market share declines were recorded across all household income levels, including high-income consumers, underscoring that even premium brands face challenges as customers become more discerning,” said Consumer Edge analyst Michael Gunther.

• Deckers continues to face fierce competition in the sneaker market, including challenges from major rivals like Nike NKE.N

• “The area where we may be losing share to other brands is the sub-$120 price range — competition is more intense in this category,” said CEO Caroti

• “We will continue to prioritize sustaining margins and creating long-term value, rather than chasing short-term incremental sales that could dilute our brand,” he added

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